Hilcorp Energy strengthens its dominant position as Cook Inlet leaseholding in Dec. 30 state, federal offshore sales

Hilcorp Energy strengthened its position as the dominant leaseholder in Alaska’s Cook Inlet with the addition of six state of Alaska offshore leases and one federal lease, also offshore, in two state and federal sales held Dec. 30.

Hilcorp bid $360,000 for the six state tracts, which are mostly adjacent to existing lease positions. The company is also the dominant oil and gas producer in the Inlet.

Alaska officials said they were pleased at the company’s continued interest in the inlet, from where Hilcorp supplies natural gas that fuels space heating and power generation for Alaska’s largest communities.

“These initial results show Hilcorp is continuing their investment and development in Cook Inlet after bidding on their first Alaska leases ten years ago. This was among the better results in recent years,” for Cook Inlet, Alaska’s Department of Natural Resources said in a statement.

There was only one bid submitted in the state’s previous Cook Inlet oil and gas lease sale in May, 2022 and prior state sales had seen no bids.

Hilcorp was also the only bidder in the federal OCS Sale 298, which offered leases in lower Cook Inlet south of state submerged lands in the upper Inlet.

The result was no surprise. The U.S. Bureau of Ocean Energy Management had cancelled the sale last May due to lack of industry interest but it was added back to the agency’s five-year schedule in the federal Inflation Adjustment Act of 2022 at the insistence of West Virginia U.S. Sen. Joe Manchin.

Prior Lower Cook Inlet OCS sales have drawn little interest with some sales being cancelled and others drawing no bids when a sale was held. Hilcorp did bid on 14 tracts in a 2017 Inlet OCS sale but there were no bids in a 2004 sale and just two bids in a 1997 sale.

Hilcorp spokesman Luke Miller did not comment on the company’s plans for new leases, but emphasized Hilcorp’s role as a producer of natural gas that fuels the Southcentral region.

“Hilcorp is proud of our work to revitalize Cook Inlet natural gas production – an energy source that nearly two-thirds of Alaskans depend on to heat and power their homes and businesses.,” Miller said in a statement.

Meanwhile, conservation groups were critical. “It’s a shame our government is willing to sell out the environment for so little. The Biden administration is wasting government time and resources to make political deals and appease Manchin, while throwing Cook Inlet communities and critically endangered Cook Inlet beluga whales under the bus,” said Kristin Monsell, senior attorney with the Center for Biological Diversity.

“Even one new lease will worsen the environment with more oil spills and greenhouse gas emissions already cooking our climate,” she said in a statement.

State officials were hopeful that the combination of a federal OCS sale sale and a state sale of nearby submerged lands would attract more companies and more exploration. Hilcorp, which won more leases Oct. 30, has warned regional utilities that existing Cook Inlet gas reserves may not be enough to meet long-term demand for gas to fuel space heating and power generation needs In the region.